FDIC closes an additional 5 U.S. banks to bring total to 69 failed banks for 2009

Wow, the U.S. bank failures are picking up speed in 2009. We should see premiums increase in the coming months or some other emergency action to bring more backing to the FDIC fund. Just in these closure alone we have approximately $1 billion more in deposits.

Many of these banking institutions are holding commercial, home-builder, equity lines along with normal loans. Many of these deals were not setup to survive a protracted downturn and only because of lax lending standards they made sense and were approved. This debt needs to default and get pushed through the system so we can achieve balance. So every time I hear one of these announcements it tells me we are one step closer to a “real” recovery.

News (Reuters):

Bank regulators closed five banks on Friday, bringing the number of failures so far this year to 69 as the struggling economy and falling home prices take their toll on financial institutions.

The Federal Deposit Insurance Corp estimated the five closures would cost its deposit fund a total of about $911.7 million. In 2008, 25 U.S. banks were seized by officials, up from only three in 2007.

During the current financial crisis, Seattle-based lender Washington Mutual became the biggest bank to fail in U.S. history. It was closed in September 2008 after losses from soured mortgages and liquidity problems.

The FDIC also has a running tally of problem banks that its examiners closely monitor. At the end of the first quarter, 305 undisclosed institutions were on that list.